They're never satisfied

[ivanm]

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Now the money changers are afraid of deflation.  Just yesterday the greedy bastards were afraid of inflation.  Once the interest rates go to zero I guess the FDR can't help us much except to print some bogus bills to hand out to the troops. 

Why can't they leave us the hell alone and we will see it through?  Get off our backs and out of our faces with the fear mongering bullshit and we will perservere.

I read from time to time how the American economy is a consumer led economy, that some 58% of our GDP comes from consumption or spending on consumer items.  I assume this means retail crap like we buy at Wallys. 

Consider this.  We have someone to thank for driving the capital goods market offshore.  There was once when America was preeminent in manufacturing heavy and sophisticated machinery used to power our industries; lathes, metal working mills, big CAT dozers and scrapers, and the like.  Now most of this good stuff is coming from the Asian countries. This is where the bucks are, the profits that make good things happen for stockholders and workers alike.

Another thing that gripes my ass is the hog wild emphasis on large scale, or economy of scale I should say.  Try to find a small to medium scale flour mill or other piece of food processing equipment on the net.  Most of the smaller mills are made in China and the wind and water turbines are also made offshore.  Small to medium scale farm tractors are invariably foreign made, even Russian made, if you want something affordable. 

I think we have shot ourselves in the feet by driving such basic industries offshore and we sorely need some small to medium scale equipment to rejuvenate our bleeding economy.  We need little to medium factories that can employ handfuls of people rather than the mega companies that once employed hundreds of people.  Thanks to the labor unions and the punitive government regulations the big operations have said "Sayonara Mutha" and have headed for greener pastures.  Can't
say as I really blame them.

Some of you might not agree, but I have worked around non-union shops most of my life and for the most part  the employees were fat dumb and happy.  They made a fraction of what an equivalent union employee might make but there was something about their jobs that held them there. My problem with unionism is the regimentation and implied adherence to asinine work rules.  It is pretty damned dumb and inefficient when an employee cannot be cross utilized just because the new work doesn't fit his union job description. It is that sort of perverted thinking that makes us a third rate manufacturing country instead of the top dogs we used to be.  If we want to survive we need to be flexible and willing to scratch for a living, and that doesn't mean to be used by greedy ignorant management types
that don't know a screw driver from a hammer.  If farmers had to work that way we would starve to death.

There was a time when the unions could get away with their bullshit because there was no real foreign competition.  Both the world wars left much of Europe and Asia prostrate when it came to manufacturing prowess, but times have changed.  Good old Uncle Sam helped them back to their feet and now they are eating us a new one when it comes to  price and quality.
 
Will someone tell me how and why a highly unionized European company can beat ours in quality and price?  We fear socialism and yet these countries are cleaning our plow, and guess what, they have been socialistic as hell ever since the French Revolution.  Something just don't add up.

[lucy]

It might have been meant to be...the US as the consumer and Asia as the producer more or less...that would explain why Japan and China have been so heavily vested in dollars....so, when we cannot consume anymore, what happens?

[ivanm]

It might have been meant to be...the US as the consumer and Asia as the producer more or less...that would explain why Japan and China have been so heavily vested in dollars....so, when we cannot consume anymore, what happens?

Yeah, if most of our jobs are service oriented then what is the basis for wealth or value in the material sense? It just seems to me that if a country has a weak manufacturing sector then in time it will fail.

[lucy]

That's the gist of the matter, I would think. Of course, when the buyers cannot buy, then what happens to those who manufacture the goods?

Of course, the "masters of the universe" might still have some chips left to play. but for many, the casino doors are being shut/so to speak.

[ivanm]

That's the gist of the matter, I would think. Of course, when the buyers cannot buy, then what happens to those who manufacture the goods?

Of course, the "masters of the universe" might still have some chips left to play. but for many, the casino doors are being shut/so to speak.

A union official was having a meeting with one of the Ford family and the Ford man expressed the view that, since union labor was so troublesome, he wished he could just automate the factories and be done with them. 

The union man had a comeback.  Mr. Ford, robots don't buy cars.

I think the fact that our manufacturing base, such as is left, may be much too dependent upon making and selling consumer goods. Already we buy many of the less durable goods that are being made overseas, such as clothing, electronic gear, and some food items.

Perhaps I have already pointed this out, but the capital goods, the heavy expensive machine tools and other things that the manufacturers use, are often being made offshore and imported.  If we could devote more to making this sort of thing and exporting it then we could balance the thing out some.  I used to work for a company that had a large machine shop and made things you poke down oil and gas wells.  When the shop was upgraded or automated guess where the machines came from, not from America but from Japan.
 
There are things that governments buy that the average consumer does not buy, such as war materiel, infrastructure projects, and the like.  I am not keen on making war materials, but if we could make and sell some of the support type of equipment such as army trucks, the equivalent of a Humvee, and small observation aircraft, that would make jobs for American labor, assuming we could compete in this arena.

However,  I would not support our selling advanced weaponsry to those who someday might turn it against us.  Such things as Patriots and other defensive missile systems may be an exception, and perhaps we could make these items available to dependable allies.
Perhaps that is already being done to a great extent.  At any rate, I hope that results in jobs for Americans and not for foreign competitors.

The nice thing about infrastructure spending is that the end result is usually not exported.  I have things in mind such as roads and bridges, upgraded airstrips and railways, water and sewer systems, and public buildings of various kinds.  Sad to say, an investment on roads and bridges seems to be good for 10 years or less, particularly in the case of heavily travelled roadways, but at least Americans get to build the product and Americans get to use it.

If we want a fresh start, and it appears we need something to resurrect our tattered economy, then maybe investments in new fuels and means of transport would ge a good idea.  For example, electrifying a thousand miles of railway that hauls coal to the power plants would be a major undertaking that would take a number of years to complete.  The added benefits of such a project would include the building of new electric prime movers or locomotives and the creation  of power needed for the railways by using biomass fuels rather than coal or petroleum based fuels.  This last benefits helps to keep the CO2 in balance, which is thought to be good for the climate.

Maybe it is a bit too early, particularly in the less populous parts of the country, but I think we need to divert some of the money and effort we spend on roads and bridges to building electrified railways and roadways for passenger and freight traffic.  Such things can be publicly owned, but typically they are private sector ventures or at least that of and economic development authority.  Turnpikes, for example, are often owned and operated by EDAs, which places less load on the taxpayer and provided more incentive to keep the system in good working order.  The Kansas Turnpike is about 50 years old and is still doing well it seems.  Some of the major bridges need to be replaced, but they are issuing bonds for this large expenditure and not soaking the taxpayer for it.  The bonds are serviced by turnpike tolls.

I have mentioned this idea before, but now there is a good opportunity to divert the surplus of Social Security taxes to conservative investments in our infrastructure and in alternate energy systems.  Some years the surplus is on the order of 80 billion dollars, and this could be loaned to responsible borrowers to do the projects I speak of.  If the interest received were of the order of 5 to 6 percent then the revenues to the lender would be sizable, on the order of 4 to 4.8 billion per year.  This could be reinvested or could be used to support maybe an expanded health care insurance program for the indigents.

I realize that last suggestion may seem to be socialistic, but at least the program could be self supporting by the system earning revenues from loans rather than relying totally on tax receipts. Thankfully I have decent healthcare coverage, with Medicare part A and part B, and with a nice supplementary coverage from my wife's retirement benefits, but there are many who have next to nothing.  This is particularly true of many small farmers and businessmen.  These people are not dead heads and work hard to make a living in most cases.  They simply cannot afford to buy heath care insurance because the profits are not that generous. 

My father was a small farmer and we did not have healthcare insurance.  When mom and dad qualified for Medicare that was the best thing that ever happened to them.  Their medigap insurance premiums seemed high, but at least they had something in the way of insurance they could afford.

[lucy]

Good luck trying to pry that money away from the bankers...good points, though.

We really have consumed ourselves into a terrific hole, though...the derivatives situation is still out there looming...but, I think since those are/were based on fraud, more or less to begin with, the swaps should be declared null and void/if possible.

[Michael]

The profits do not go to "we" or the U.S. government.  They go to the profiteers.  The greed-enterprise system has NOT been done away with.

[ivanm]

Good luck trying to pry that money away from the bankers...good points, though.

We really have consumed ourselves into a terrific hole, though...the derivatives situation is still out there looming...but, I think since those are/were based on fraud, more or less to begin with, the swaps should be declared null and void/if possible.

If the banks and lending institutions were part of the lending mechanism maybe they would participate.  By having the private sector do the work associated with granting large scale loans for big projects the government can avoid the duplicative expense of having to do it themselves. 

Consider this. A contractor receives a billion dollars to do a project.  He will in turn spend much of that for building materials, labor, and such, which results in money flowing into various bank accounts anway.  It is pretty hard to do much without the participation of  some sort of financial institution.  The net result or objective is to stimulate the economy in the short run and to end up with something tangible to show for that will in time yield savings of fuel, money and effort down the road.

[Michael]

  Will someone tell me how and why a highly unionized European company can beat ours in quality and price?  We fear socialism and yet these countries are cleaning our plow, and guess what, they have been socialistic as hell ever since the French Revolution.  Something just don't add up.

In my concern for a more intelligent culture...I have addressed this issue with the gain of gross mis-understanding......

A large part of the reason for "grade-B" or disposable products in the U.S. is because the competitive level was more self-assured...before the rest of the world became such close neighbors. 

Too self-assured.  More than is recognized.  It was far too easy to industrially out-do those who occupied so much more of the continent than they do today...the american Indians.

This high budget/low quality self-assurance is ingrained in the U.S.  Truth comes out in SOME form...eventually.

Is it too late to become well-grounded in a more old-world/cultural morale instead of a greedy land grab?   Who is even considering it?  Who is even concerned with what is being seen by those in the world who dislike the U.S.?

[lucy]

[lucy]

In my concern for a more intelligent culture...I have addressed this issue with the gain of gross mis-understanding......

A large part of the reason for "grade-B" or disposable products in the U.S. is because the competitive level was more self-assured...before the rest of the world became such close neighbors. 

Too self-assured.  More than is recognized.  It was far too easy to industrially out-do those who occupied so much more of the continent than they do today...the american Indians.

This high budget/low quality self-assurance is ingrained in the U.S.  Truth comes out in SOME form...eventually.

Is it too late to become well-grounded in a more old-world/cultural morale instead of a greedy land grab?   Who is even considering it?  Who is even concerned with what is being seen by those in the world who dislike the U.S.?

We can always work toward better solutions and a sounder fiscal policy, really, but...one needs to listen to voices of reason who care about the situation for others and not just themselves, imo.

Good luck finding those voices. I just posted a few I find valuable.

[ivanm]

Mr. Sinclair tends to paint a cynical doomsday scenario, and that won't get our economy back on track. In times of stress government injection of money and the financing of infrastructure projects by the taxpayer are typical techniques used to resurrect an ailing economy. 

My idea of loaning out trust fund surpluses is cool because it does not involve borrowing money the gubmint doesn't already have.  Surpluses result when receipts exceed the expenditures, such as with social security and Medicare tax collections or fuel tax receipts. This money is cash on hand, so to speak, and could be loaned out to the private sector or to state and local govenments and EDAs to create things of lasting value. I think of them as capital improvements.

Contrast that approach to handing folks a stimulus check and seeing them spend it on consumables at Wally World.  Once the stuff is used up, which might be in a matter of days if it is edible products, the consumer is back to square one and will go wanting for another handout.  That to me is the downside of placing too much emphasis on consumerism.  It is thought to be the most market oriented in that the consumer buys a variety of products and services and the money is spread around to a lot of vendors as opposed to being concentrated on say bridge builders and construction materials.  However, a good bridge should last for 50 years or so, and that is a far cry from buying a sack of potatoes and using it up in a few days time.


The best stimulus is a job, one that continues to pump out wages year after year.  How did Reagan say it?  The best handout is a job.  He had a good point.
 
I sometimes blog to the EDF Green Room, EDF meaning the Environmental Defense Fund.  I don't know them well at this time but they seem to be activist in nature and maybe a bit radical in some respects.  Their objective is to influence legislation that will clean up the environment, especially the air.  At present their battle cry is that new enviro friendly activities will make new jobs for Americans, and I  can at least support that proposition.

The EDF likes the cap and trade system of limiting emissions, particularly CO2 emissions.  I see great opportunities to abuse the system, but essentially those who try to limit emissions with their green activities are paid money for research and development, perhaps even operating expenses.  The blog mentioned wind turbine manufacture as one green effort.
 
A local farmer says that even those who use the no till crop system can qualify for this cap and trade money.  "No till" refers to the practice of not working the ground so much in between crops and thereby using less fuel to ready the soil and plant the next crop. There is a downside to this that the big boys don't advertise.  Plant pathogens continue to grow unless the residue is burned off or turned under, and the soil can become compacted if the residue is not turned under to rot and make the soil more porous.  Both of these downsides can result in lower yields.  Weed killers such as the chemical called Roundup are often sprayed on a field to kill the residue if the farmer is double cropping, or trying to get more than one crop per growing season.  Yes, the spraying takes less fuel than plowing and smoothing the soil, but there has to be a downside to using these chemicals in such large quantities. 

This would take time to prove, but we need a larger part of our economic activity
that is not materially affected by the business cycle fluctuations and one that can resist dramatic swings in prices such as we have been seeing recently.  Unleaded gas is 1.68 locally compared to almost 4.00 about a year ago.  I am not convinced there is any fundamental supply and demand reason for such swings in prices and I think the piggish traders realized they shot themselves in the foot by driving up
the prices without reason. In the meantime a lot of folks have suffered because if this runaway pricing caused by speculators.

Detroit started screaming like a hog under a gate because customers couldn't afford to drive their fuelish SUVs so what happened, big oil dropped its pants and the price of fuel plummeted.  Wonder who is sleeping with who?  The consumer and the laborers need a better deal. They need prices for fuel, food, and such that are consistent and reasonable, and I think that by switching to alternate energy systems and biofuels we can finally arrive at that point. It may take from 5 to 10 years to make a significant difference but what have we got to lose by going for it?

Suppose you didn't use a car to get around.  Would you be impacted by swings in fuel prices?  Not so much and you might not even care. That is the position we need to be in, to tell big oil to take a flying fornication at a hole in a rolling donut.  In other words get lost hog, we don't need you or your stinkin' oil.

I think that when it comes to infrastructure, the use of mass transit devices and electrified railways will create new jobs and secure jobs as maintaining such devices requires continual effort.  So what if the system is not as efficient as it might be or is not as fast as air travel or is not as convenient as personal car and truck travel.  At least we can keep going and won't have to wear a pad when we go to the gas pump.

One problem out here in the boonies is that mass transit, I should say public transit, is practically non-existent.  And I think that Pepsi can relate to what I am
about to propose since he has an interest in architecture and urban planning.  Our infrastructure to support mass transit is gone, kaput, and if we hope to use transit buses and train service then it must be recreated.  I don't see this as a detriment but as an opportunity to create new stations and facilities to handle the mass transit devices and its traffic.  All this means jobs for Americans, good jobs making good long lasting products, and these new facilities would require people to operate and maintain them.

The other problem, and this is especially true of cities in the central and western part of the country, is resistance to riding the bus, so to speak.  Cities are not designed to accommodate bus borne traffic and the business parks are typically strung for miles along beltways in a fashion that does not lend itself to mass transit traffic. Shopping malls are often accessible only by  private vehicle rather than incorporating a comprehensive bus and commuter train system, as they are in parts of Europe.  I just loved to go to Frankfurt on the bus and saw the transit system at work.  It is a new way of life, relative to how we get around here in America, and it is a sociable and pleasant way of life.

Suburbs have been designed and built to be accessed primarily by private auto where they need to be designed with mass transit in mind.  That way one could walk a block or so, hop a bus or train to work or to shop, and leave the driving to someone else.  I used to ride the city bus when I worked in WDC back in the seventies, and I really enjoyed it.  It was an express bus and I could ride it one way
from the edge of town to the White House area for 1.05.  One couldn't even drive it that cheap and parking costs maybe 4.00 a day, so it was a good deal for me.

There was this big woman that used to wake me when the bus came to my stop at the end of the line in the evening, that is, until one day she was not there, and I was awakened by the driver wanting to know where I wanted off.  I had no idea where we were and he kindly took me back to my stop. He normally would have headed for the barn.  Very nice of him I'd day.

[Michael]

So they have a way of reversing the historical damage?  An end to the racist capitalistic attitude which has been buried in the big black/white issue?

I doubt it.  The damage is too severe to erase with mere policies.

[Velleity]

While I am disturbed by the idea of losing manufacturing, I cannot give any rational answer as to why manufacturing is any more or less important than services.

I used to represent more manufacturers, mostly printers as we had a large printing industry here. I'm down to two and I can tell you that it is very, very difficult for them to be profitable. Of course scale is important, but not necessarily in obvious ways. A printer that grosses $3 million can be profitable, while one that grosses $5 million is in trouble. This has to do with the cost accounting (a lost art amongst accountants) and things like the numbers of workers per press.

What I can say is that it is important to have a diversified economy, and I think manufacturing is a key component in order to avoid massive GDP swings. We need to have heavy lifting type jobs for some of our workers.

I think it is, too, a matter of our national defense. We cannot let our manufacturing base go away completely.

Ivan, you are absolutely correct in your assertion that the economy is consumer driven and you have to pay people enough to be able to consume. For a couple of decades now we have financed that consumption on the stock market, before about 2000, home equity, until a couple of years ago, and credit cards (of course). We have not had sufficient increases in wages to support the consumption we need, and I believe this is the crux of our current financial woes and where the Republican agenda really falls down.

I also believe there is a good reason we have service jobs. In my business I charge $275 for each hour of my time. Entry costs are relatively low and I do not charge what the market will bear. If I were to try to manufacture I would have huge start up costs and risk, with low profit margins. Now why would I invest in that instead of growing my service business?

And even if I had something to manufacture why wouldn't I shift all of those capital requirements and risks to China, so I could spend my time and resources on higher returns from marketing and selling?

Again, I'm not sure about the ramifications of all of this, but I am trying to put some thought into it.

[ivanm]

So they have a way of reversing the historical damage?  An end to the racist capitalistic attitude which has been buried in the big black/white issue?

I doubt it.  The damage is too severe to erase with mere policies.

I'm not sue who's post you are answering.  Please explain.

Sometimes damage cannot be undone, but the best we can do now is to stop the bleeding.
I don't think that turning over large areas of our country to the native Americans will get us out of the hole we are in. 

I don't think you concerns will ever get enough support to do anything that might compensate your people but I would support this type of a proposition.  Place certain tracts of land in the care of the tribes with a 100 year lease with provision that the tribes would permit eco friendly use of that land by the whites.  I am thinking in terms of managed forest cutting, wildlife parks for recreation  purposes, and the like.  I think that even now there are Indians who have producing mineral rights in parts of Oklahoma but I won't swear to that.  That approach  can give the royalty holder a nice income, and in the case of natrual gas wells, does not do wholesale damage to the land surface.  My wife and step kids have mineral rights and they get a little check almost monthly.  It comes in handy.  They have inherited this gas producing property from their ancesgors.  Just the other day the stepdaughter who lives with us got a 7100 dollar check because a company wanted to run a pipeline across her share of the 130 acres she and her brother own jointly.  It is like finding it in a way, and in time the scars of trenching will heal. My father farmed an 80 acre patch that had 4 large NG pipelines running across it.  For a few years the scar left from the backfill did not produce well but in time it came back alive. Subsoil, if left on top, doesn't have the nutrients and the traits to make good crop soil.  In time crop residue and commercial fertilizer brings it back up to snuff.